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9/7/99 conference call meeting transcript




















18 Arlington, Virginia

19 Tuesday, September 7, 1999














1 P R O C E E D I N G S

2 (2:04 p.m.)

3 GOVERNOR GILMORE: First of all,

4 welcome. Was there roll call being taken

5 when I joined the call, or has that been

6 completed?

7 MR. DeFEND: No, sir. We were in

8 the midst of the roll call, actually. I

9 believe that we are missing Mr. Andal, and I

10 don't believe he'll be joining us until

11 later. I don't believe that Governor Locke

12 is on the line.

13 MR. KIGA: Fred Kiga for Governor

14 Locke.

15 GOVERNOR GILMORE: All right. Let

16 me first of all begin by welcoming everybody.

17 Mr. Andal, by the way, will not be joining us

18 until about 2:30, and then he will be on the

19 line. We understand David Pottruck only has

20 a few minutes because he's breaking up

21 another meeting, so we'll get down to this as

22 quick as we can.











1 Welcome very much to the meeting.

2 The meeting was called in order for the Work

3 Plan Subcommittee to present its plan to the

4 full Commission. Under the Commission rules,

5 we're not able to nor should we hold any kind

6 of formal vote on this teleconference. Votes

7 are restrained to person-to-person meetings

8 of the Commission, and, of course, we'll be

9 doing that next week in New York.

10 But this is a time for Mr. Pottruck

11 to outline the work plan and to get

12 everybody's comments or concerns and to

13 address all those matters. We will have a

14 formal vote on adoption of the work plan in

15 New York City.

16 Let me remind all of you who are

17 members of the Work Plan Subcommittee in

18 addition to myself, Dean Andal, Mike

19 Armstrong, Joe Guttentag, and all of the

20 others, as a reminder let me remind you that

21 under the rules only Commissioners may

22 participate in this meeting. This is a











1 formal meeting of the Commission duly noticed

2 that we have on the line here.

3 We certainly welcome all surrogate

4 staff members, et cetera, et cetera, and

5 that's just fine. We certainly would ask you

6 to take your notes and to communicate

7 directly with your Commission member on any

8 matters. But since we have up to 19 members

9 that will be on the phone line at one time or

10 another, we would like to designate

11 Commission members to do the talking, as

12 indeed is the case at all Commission

13 meetings.

14 I would ask that everyone please

15 identify yourself at the time that you speak

16 so that we know who we're talking to. Also,

17 that's good for the transcription and the

18 record. The meeting is being audiocast on the

19 Commission's web site and is also being

20 transcribed, and a copy of the transcription

21 will be posted on the Commission's web site

22 tomorrow. So please just say your name at











1 the time you begin to speak, and then we'll

2 have everybody captured by the transcriber.

3 Let's begin by asking each of the

4 Commission members to please chime in, tell

5 us that you are here, and announce yourself,

6 if you please.

7 MR. LEAVITT: Mike Leavitt,

8 present.

9 MR. NORQUIST: Grover Norquist,

10 present.

11 MR. GUTTENTAG: Joe Guttentag here.

12 MR. SIDGMORE: John Sidgmore here.

13 MR. PITTMAN: Bob Pittman here.

14 MR. PARSONS: Dick Parsons here.

15 MR. LEBRUN: Gene Lebrun here.

16 MS. JONES: Delna Jones here.

17 MR. SOKUL: Stan Sokul here.

18 MR. PINCUS: Andrew Pincus here.

19 MR. POTTRUCK: Dave Pottruck here.


21 Commission members on the line? Okay. Maybe

22 some others will be joining us as they come











1 in, and hopefully they will announce

2 themselves by something besides the little

3 melodic beep that comes into the telephone.

4 It's my pleasure now to turn the

5 meeting over to the Work Plan Subcommitte

6 Chairman, David Pottruck. David, thank you

7 for all the work you've done and please

8 begin.

9 MR. POTTRUCK: Thank you very much,

10 Governor. Good morning, everyone, good

11 afternoon on the East Coast. So let me go

12 over our recommendation to the Commission.

13 First of all, I'd like to thank

14 everybody who participated in the efforts.

15 We had two conference calls, each one lasted

16 roughly about an hour, an hour and 20

17 minutes, and we talked about how we can

18 organize the work of the meeting in New York

19 and in San Francisco and in Dallas. We also

20 have sent out to all of you our outline of

21 what our plans look like.

22 Specifically, by the way, the











1 members of the subcommittee, we had about 10

2 members of the Commission, not including

3 myself and the Governor, so altogether there

4 were 12 of us who participated with staff in

5 putting together our recommendations, and I

6 think, Governor Gilmore, you'd agree that

7 there was a lot of lively debate and

8 discussion, a lot of input.

9 And I think we've come up with a

10 good product which we have sent out to all of

11 you and which we can talk about today, and I

12 hope there will be some more discussion and

13 input today as people would like to jump in

14 and offer their points of view.

15 It's been an interesting discussion

16 for me because certainly this is a broad

17 topic area, and we had wide-ranging

18 discussions in Williamsburg, and I think

19 we've tried to go from the very broadest

20 perspective into something a little more

21 manageable. I think all of us have looked at

22 the work we have ahead of us and recognize











1 that, given the amount of time we have both

2 in terms of the time between now and a report

3 being produced as well as the amount of time

4 we have collectively together, the amount of

5 work is daunting.

6 And, therefore, we've tried to

7 force upon ourselves the discipline of

8 narrowing down the work into some more

9 tangible and perhaps a little narrower focus

10 than many of us would like. There's a rich

11 set of issues to be discussed in the topic of

12 the Internet, and so many of us are

13 completely consumed by the issues that we

14 recognize there's a lot we have to leave off

15 the table, but I think we have no choice but

16 to go in that direction.

17 So let me be specific about the

18 work plan and the process and the goals that

19 we have in store for you. Having already

20 sent out a memo, I don't want to be

21 completely redundant, but let me just offer

22 some highlights.











1 Our belief is that discussion at

2 the New York meeting will focus on three

3 primary topics, and the majority of the

4 meeting time will be comprised of

5 Commissioner dialogue with some time

6 available for some brief presentations by

7 outside groups. As you see in the written

8 materials, we've tried to be very limiting on

9 the outside groups.

10 We think that the Commission itself

11 was formulated to represent the broadest

12 views, and we have a lot of expertise in our

13 Commission members, and we want to make sure

14 that we have plenty of time for Commissioner

15 dialogue, and I'm sure that dialogue will be

16 very robust because of the broad spectrum of


18 But we can be informed by some

19 outside presentations. There's an enormous

20 number of people who would like to come and

21 present. Governor Gilmore and his staff have

22 taken upon themselves to ask for











1 recommendations from all of us, but they will

2 narrow them down to a tighter list. We'll be

3 asking for presentations of not more than

4 five minutes in length with a robust

5 question-and-answer period, and all

6 presenters must also give us a 2-page

7 executive summary of their topics.

8 Also, I think many other experts

9 will be offered the opportunity to come and

10 participate as resources so that we can turn

11 to them and ask for opinions if we get into

12 areas where greater expertise would add to

13 the dialogue. The discussion in New York

14 will be distilled into an issues and policy

15 options document which Commissioners will

16 have the opportunity to review and comment on

17 prior to the San Francisco meeting.

18 So there is a drafting process

19 coming out of New York, and it lays out what

20 the big issues are and what our options are.

21 We have to discuss in New York who is going

22 to do that drafting. Obviously, that's very











1 important. What kind of a structure and

2 process do we want? That's also part of our

3 New York discussion.

4 We would probably have one or

5 several conference calls between the New York

6 and the San Francisco meeting of whatever

7 group is working on this document. I think

8 we would say that the two conference calls

9 we've had thus far are concise and

10 productive. I hope people feel that way, and

11 I think we can get a lot done with the proper

12 distribution of written documents and then

13 with our conference calls without having to

14 travel places.

15 The primary objective, then, of the

16 San Francisco meeting will be for the

17 Commissioners to discuss the array of issues

18 and policy options contained in the document.

19 (interference) expectation that our document will be

20 agreed upon, or we will have a sense of where

21 the agreement is and where our points of

22 disagreement are coming out of our San











1 Francisco meeting.

2 The document would then serve as a

3 springboard for the final recommendations of

4 the Commission, and we will have to decide

5 whether the document coming out of San

6 Francisco is considered an interim report or

7 simply a draft of the final report, and we

8 will also discuss in San Francisco what

9 processes we need to go from that draft to

10 the final report. The final report will be

11 distributed in Dallas. I would say still

12 it's a draft of the final report.

13 There are opportunities for debate

14 and discussion and to confirm with all the

15 members present that we in fact have a

16 consensus around all of our recommendations.

17 I think we have a governance process that's

18 very specific about what constitutes a

19 recommendation and a consensus, and we will

20 strive toward that kind of a consensus,

21 recognizing that oftentimes we will not be

22 successful with unanimity, I'm afraid.











1 And I think our goal clearly is to

2 have our final report published and forwarded

3 to Congress no later than April 21 of the

4 year 2000.

5 So, Governor Gilmore, I think that

6 is what we have talked about as a Work Plan

7 Committee, and I turn it back over to you,

8 Governor, to run this call and to solicit

9 input from our Commissioners on that

10 recommendation.

11 GOVERNOR GILMORE: David, do you

12 have time to remain on the line for any

13 questions, or do you need to depart now?

14 MR. POTTRUCK: No, I can stay on

15 this call for another 30 minutes.

16 GOVERNOR GILMORE: Oh, terrific.

17 That's great. Ladies and gentlemen, that

18 gives you a summary of it, and, of course, I

19 think my staff and personally a majority of

20 the Commission had participated in the

21 formulation of the work plan. Those that

22 were neither there in person nor by staff at











1 least have an opportunity now to (unitelligible) David

2 Pottruck's presentation of it.

3 First of all, are there any

4 questions for David? Are there any questions

5 for David Pottruck by any Commission member?

6 No questions for Mr. Pottruck?


8 great.

9 GOVERNOR GILMORE: Well, that's

10 great. Now let's ask whether there's any

11 sort of comments or suggestions or commentary

12 that anybody would like to make as part of

13 the Commission on the work plan that we've

14 got right now. If so, please identify

15 yourself and proceed.

16 MR. LEBRUN: Governor, I noticed

17 under the format of the New York meeting

18 requesting that the written submission from

19 the presenters and experts be made by today

20 at 5:00 p.m. Have the presenters been

21 identified? Are they aware of that deadline,

22 which is today?











1 GOVERNOR GILMORE: We propose to

2 push back that deadline until Thursday to

3 give the presenters an opportunity to present

4 their 2-page plans and proposals, and, yes, I

5 believe that all presenters have been spoken

6 to and are aware that they are on their way

7 to New York.

8 MR. LEBRUN: When will those names

9 be released to the members of the Commission?

10 GOVERNOR GILMORE: I'm happy to go

11 through them right now, as a matter of fact.

12 Let me, first of all, say that there was a

13 large number, and we tried to get this down,

14 the objective of the exercise being to give

15 everybody a fair chance to have their point

16 of view heard. And let me talk to you, and I

17 think you'll hear when I tell you who has in

18 fact proposed these people, that pretty much

19 everybody on the Commission who's made a

20 suggestion has had a chance to have some

21 input.

22 The issue of telecom cable access











1 is the first issue, I believe, on the agenda.

2 First of all, we've invited Annabelle

3 Canning, the vice president of the Committee

4 on State Taxation, proposed by Mr. Armstrong;

5 Bob Herbold, the COO of Microsoft, by

6 Mr. Pittman; Raymond Keating, Small Business

7 Survival Committee, by Mr. Norquist; and

8 Charles Brewer, the CEO of Mindspring by

9 myself, although we're not sure whether he

10 will be able to come.

11 Now, on the large issue, as we had

12 previously discussed and if you look at the

13 agenda, there is about five hours set aside

14 for the large issue of local, state, and

15 federal tax issues. While on the telecom

16 cable and access issues very few people were

17 put forward, a very large group was put

18 forward for this other major topic of local,

19 state, and federal taxes.

20 I have invited Bruce Josten of the

21 U.S. Chamber of Commerce, my suggestion; Jim

22 Eads of Ernst & Young, on not only my own but











1 Mr. Armstong's suggestion; Carl Griswold, a

2 partner with Peat Marwick, KPMG, by

3 Mr. Andal; William Gregory Turner, the

4 California Taxpayers Association, Mr. Andal;

5 George Isaacson, the Direct Marketers

6 Association, Mr. Sokul; Kaye Caldwell,

7 Commerce Net, offered by Mr. Lebrun and

8 Mr. Sokul.

9 Fran Smith of Consumer Alert by

10 Mr. Norquist; Carol Keaton Rylander or Bill

11 Eggers, Texas Comptroller's Office,

12 Mr. Norquist; Larry DeFranco, he's going to

13 be, I think, there as an expert only,

14 according to what he believes is right.

15 The next one is Harley Duncan, the

16 director of the Federation of Tax

17 Administrators, offered by Governor Leavitt,

18 Governor Locke, and Mr. Lebrun; Matthew

19 Kisber and Steve Rauschenberger of the NCSL,

20 offered by Governor Leavitt, Governor Locke,

21 Mr. Lebrun, and Paul Harris, Delegate Harris.

22 The next is Gary Cornia or Kendall











1 Houghton of the National Taxpayers

2 Association, offered by Governor Leavitt,

3 Mayor Kirk, Governor Locke, and

4 Mr. Armstrong.

5 The next is Alton Adams, the

6 president of Standard & Poor's, offered by

7 Mayor Kirk and Delna Jones; a representative

8 not yet named from the National Association

9 of Counties, the U.S. Conference of Mayors,

10 and the National League of Cities, offered by

11 Mayor Kirk and Delna Jones. Finally, Dan

12 Bucks, the director of the Multistate Tax

13 Commission, offered by Mr. Lebrun.

14 This gives a fair representation, I

15 think, of the people who in fact did offer

16 proposals. I might point out that there were

17 no recommendations specifically for

18 presenters from the other members of the

19 Commission.

20 MS. JONES: This is Delna Jones.

21 Governor, I would like to make a change, as I

22 believe Heather has the information, in











1 relationship to the presenters that I and

2 Mayor Kirk recommended. Standard & Poor's

3 report is not going to be ready, so they will

4 not be a presenter. And we have names now

5 for the state and local people that will be

6 presenting, so we can give those to Heather

7 if she doesn't have them already instead of

8 taking other people's time,

9 GOVERNOR GILMORE: Outstanding.

10 We'll be happy to receive that. At five

11 minutes for each one, we're estimating that

12 we'll probably end up at about 12, we think,

13 on this big topic, and when we do that that's

14 about one hour out of the five for presenters

15 and the balance for debate among the

16 Commission.

17 The third group that we'll be

18 talking about is international issues, and I

19 have invited Michelle Aujean of the European

20 Union, director of tax policy; Jeffrey Ownes,

21 the OECD, director of fiscal affairs, and

22 those are both offered by Mr. Sokul; and Fred











1 Smith of the Competitive Enterprise Institute

2 offered by Mr. Norquist.

3 I recognize, of course, that our

4 federal brethren here may not wish to engage

5 and put so much public debate on this topic,

6 of that we will be respectful, but I believe

7 that it's pretty important to hear from

8 Mr. Sokul's proposed people.

9 Those are the people. Naturally, I

10 understand that by reading this over the

11 conference call it wasn't so easy for

12 everybody to take it down, but staff people

13 will be faxing you all a copy immediately of

14 the proposed presenters so that you will have

15 them today.

16 MR. LEBRUN: Thank you, Governor,

17 very much.

18 GOVERNOR GILMORE: Any other people

19 who wish to address the topics of the work

20 plan or the New York meeting?

21 MR. PITTMAN: Governor, this is Bob

22 Pittman. I just wanted to thank David for











1 his leadership on the subcommittee and also

2 compliment him on producing a very concise

3 plan and identifying really the three issues

4 that I think most of our discussion will

5 revolve around.

6 MR. NORQUIST: I'd just like to

7 second that thought.

8 GOVERNOR GILMORE: I think we're

9 all very lucky to have had David Pottruck

10 willing to get in there and to go to work on

11 this thing and to get this done working

12 together with so many of the Commission

13 members.

14 David, thank you very much on

15 behalf of the entire Commission.

16 MR. POTTRUCK: Thank you, Bob, Ed,

17 and Norquist and Governor Gilmore. I

18 appreciate that. I'm lucky to have had a

19 good staff that made it easier for me to do

20 this and have the cooperation of the

21 committee to get this done. Everybody really

22 pitched in and I appreciate that. Thanks.











1 GOVERNOR GILMORE: Other comments

2 from members of the Commission, if any?

3 MR. LEBURN: What's for dinner on

4 Tuesday?


6 modest this time. I believe a little fast

7 food might be in order, but we'll talk about

8 it.

9 Well, ladies and gentlemen, that

10 concludes this preliminary discussion. We

11 will take a formal vote on this matter when

12 we get to New York. In the meanwhile, I will

13 look forward to meeting with all of you, and

14 we will have very long and robust two days,

15 I believe.

16 (Whereupon, at 2:24 p.m., the

17 PROCEEDINGS were adjourned.)

18 * * * * *





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